Lindsey Wicks, tax writer at Croner-i, examines the lack of clarity over the operation of rules concerning insurance proceeds received post-cessation in the wake of the Sinclair ruling
Relief for post-cessation expenditure is generally only available against a taxable post-cessation receipt of the same or subsequent tax year. The exception to this is where the expenditure qualifies for the more generous post-cessation trade relief that can be claimed against general income or gains.
However, the recent First Tier Tribunal (FTT) decision in David Sinclair v Commissioners for HMRC [2019] TC 06873 highlights the difficulty in gaining relief in the desired tax year. The appellant in this case, David Sinclair, had been a partner in a firm of accountants and claims for damages were made by a former client and her company in respect of advice he had given while a partner.
